The FASB requires which of the following to be used in preparation of external financial statements?
A)variable costing
B)standard costing
C)activity-based costing
D)absorption costing

Question

Quizplus · Accepted Answer

The FASB requires the use of absorption costing in preparation of external financial statements. This is because absorption costing takes into account all manufacturing costs, both fixed and variable, and assigns them to the units produced. This provides a more accurate reflection of the total cost of manufacturing and helps in determining the appropriate pricing and profitability of the products. Variable costing, standard costing, and activity-based costing are useful for internal reporting and decision making, but they do not comply with GAAP requirements for external financial statements.

The FASB Requires Which of the Following to Be Used